Retirement
‘We are only beginning’ to navigate superannuation and dementia: report
Retirement
‘We are only beginning’ to navigate superannuation and dementia: report
Australia has only scratched the surface on the ramifications of dementia on superannuation’s choice-based structure, a new report argues.
‘We are only beginning’ to navigate superannuation and dementia: report
Australia has only scratched the surface on the ramifications of dementia on superannuation’s choice-based structure, a new report argues.
According to new findings from the Arc Centre of Excellence in Population Ageing Research (CEPAR) and Neuroscience Research Australia (NeuRA), the direct cost of dementia is set to hit $12 billion by 2025. That’s compared with $9 billion in 2016, the Cognitive ageing and decline: Insights from recent research report found.
However, CEPAR and NeuRA also found the rising prevalence of dementia in Australia will have consequences for financial decision-making.
“Our retirement income system is very complex and requires a lot of active decisions. We are only beginning to think about how population ageing will affect the decision-making ability of older cohorts and what insights psychology and behavioural finance can bring,” said CEPAR director Professor John Piggott.
He called for greater investment into ageing research to help identify dementia risk factors, build strategies to assist financial decision-making in old age and create more workplace support for older workers.
The report’s co-author and CEPAR chief investigator at UNSW Professor Kaarin Anstey added that about 8 per cent of Australians in their 60s experience mild cognitive impairment, although a large portion of this cohort never develop dementia.
Nevertheless, even a mild cognitive impairment can have significant consequences for decision-making.
It doesn’t help that financial decisions are difficult for Australians of all ages, Professor Hazel Bateman added.
The CEPAR chief investigator at UNSW Business School explained, “Australians nearing retirement score higher in tests of financial literacy than younger people or those in other countries, but about half of them answer basic questions about inflation, interest rates and diversification incorrectly.
“As the population ages and more people face cognitive limitations, we need to consider whether the choice architecture of superannuation can cope.”
According to CEPAR and NeuRA analysis of behavioural finance, defaults can be useful but require careful design.
Additionally, improved regulation of information provision safeguards against inappropriate financial advice to vulnerable consumers and financial literacy programs that cater to older Australians’ learning styles are required.
“The need to allow individuals their financial freedom while mitigating confusion and poor decision-making among this age group is something that has yet to be reconciled in the literature and in policy,” Professor Bateman concluded.
RELATED ARTICLES
Superannuation
Aware Super elevates tech leadership with strategic appointment of Richard Exton
Aware Super, one of Australia's largest industry super funds, has announced a pivotal appointment to its executive team, underscoring the growing importance of technology, data, and artificial ...Read more
Superannuation
Rest appoints Marina Pasika as interim head of private markets
Rest, one of Australia's largest profit-to-member superannuation funds, has announced the appointment of Marina Pasika as the Interim Head of Private Markets. This decision comes as the fund embarks ...Read more
Superannuation
Payday Super bill introduces new challenges for SMBs, reveals Employment Hero CEO
The introduction of the Payday Super bill to the Australian Parliament has sparked a significant response from the business community, particularly among small and medium-sized businesses (SMBs)Read more
Superannuation
Rest urges Parliament to expedite payday super legislation
In a significant move towards enhancing retirement outcomes for Australian workers, Rest, one of the country's largest profit-to-member superannuation funds, has expressed strong support for the ...Read more
Superannuation
Recalibrated super performance test aims to enhance accountability and investment opportunities
In a move that signals a shift rather than a cessation, Australia's government has announced a targeted review of the superannuation performance test. This recalibration, prompted by the latest ...Read more
Superannuation
Super performance test faces a fork balancing member value productive investment and regulatory trust
APRA’s latest superannuation performance test results have reignited a high‑stakes debate: does the test optimise member value or unintentionally curb long‑term investment in housing, infrastructure ...Read more
Superannuation
Aware Super unveils innovative digital tool to boost retirees' financial confidence
Aware Super has unveiled a groundbreaking digital advice tool, Retirement Manager, designed to empower retirees by addressing their most pressing financial concerns. Developed in collaboration with ...Read more
Superannuation
APRA's super shake-up: Balancing accountability and innovation in the next round
Australia’s performance test has forced long-overdue transparency in super and accelerated consolidation. But as the regime broadens, its blunt edges are colliding with investment complexity, ESG ...Read more
Superannuation
Aware Super elevates tech leadership with strategic appointment of Richard Exton
Aware Super, one of Australia's largest industry super funds, has announced a pivotal appointment to its executive team, underscoring the growing importance of technology, data, and artificial ...Read more
Superannuation
Rest appoints Marina Pasika as interim head of private markets
Rest, one of Australia's largest profit-to-member superannuation funds, has announced the appointment of Marina Pasika as the Interim Head of Private Markets. This decision comes as the fund embarks ...Read more
Superannuation
Payday Super bill introduces new challenges for SMBs, reveals Employment Hero CEO
The introduction of the Payday Super bill to the Australian Parliament has sparked a significant response from the business community, particularly among small and medium-sized businesses (SMBs)Read more
Superannuation
Rest urges Parliament to expedite payday super legislation
In a significant move towards enhancing retirement outcomes for Australian workers, Rest, one of the country's largest profit-to-member superannuation funds, has expressed strong support for the ...Read more
Superannuation
Recalibrated super performance test aims to enhance accountability and investment opportunities
In a move that signals a shift rather than a cessation, Australia's government has announced a targeted review of the superannuation performance test. This recalibration, prompted by the latest ...Read more
Superannuation
Super performance test faces a fork balancing member value productive investment and regulatory trust
APRA’s latest superannuation performance test results have reignited a high‑stakes debate: does the test optimise member value or unintentionally curb long‑term investment in housing, infrastructure ...Read more
Superannuation
Aware Super unveils innovative digital tool to boost retirees' financial confidence
Aware Super has unveiled a groundbreaking digital advice tool, Retirement Manager, designed to empower retirees by addressing their most pressing financial concerns. Developed in collaboration with ...Read more
Superannuation
APRA's super shake-up: Balancing accountability and innovation in the next round
Australia’s performance test has forced long-overdue transparency in super and accelerated consolidation. But as the regime broadens, its blunt edges are colliding with investment complexity, ESG ...Read more
